Recently, the ProGold Board of Governors voted to resume monthly distributions to its members. The Golden Growers Board is now able to consider future obligations against revenue as they plan for member distributions.
On June 15th, the Golden Growers Board of Directors approved a distribution of $0.14/bushel or $2,168,667 to members of record as of June 1, 2017. This distribution is to be issued no later than June 30th. Total 2016 allocated income was $7,366,209. Along with the February distribution, a total of $4,383,806 of 2016 equity credit has been retired.
Your Golden Growers Board believes it is important to build a reserve during the course of this lease for several reasons. If Cargill chooses to exercise its option to purchase 50% interest in ProGold from American Crystal Sugar Company, Golden Growers will be obligated to buy American Crystal’s remaining 1% in ProGold. In addition, there are likely to be capital expenditures during the lease that are the obligation of ProGold while lease income declines. When capital exenditures occur, distributions from ProGold will be reduced. By building a reserve, Golden Growers Cooperative will be able to moderate the impact of those capital expenditures and declining lease revenue.
The distribution authorized by the Board will result in a remaining equity credit balance for 2016 of $2,982,403.
With this payment, Golden Growers has issued payments to members totaling $94,043,859. This represents 174% of members’ original equity investment in the ProGold plant.
Executive Vice President’s Report
/in NewsThis is our first full year as a single employee organization, stated Scott Stofferahn, Golden Growers Executive Vice President. “We’ve been able to make it work through contracting with Eide Bailly for bookkeeping and by finding more efficient ways to do things. As a result, our administration expenses are down this year and are projected to be down again in 2018.” Stofferahn stated that GGC will save roughly $40,000 annually under terms of the new Grain Services Agreement with Cargill. And despite more SEC reporting associated with a new ProGold lease, overall SEC costs are lower than they have ever been.
Direct Deposit of distribution checks continues to grow with 506 members or 33% currently enrolled. “We will continue to encourage members to participate in this time and cost saving payment delivery method.”
Stofferahn reserved most of his time to discuss Board Governance – specifically a proposal to reduce the size of the Board from 15 members to 9 and reduce the number of districts from 5 to 3. “A preferred plan has been identified, but the Board has not endorsed a plan.” Any change would require a Bylaw amendment at the 2019 Annual meeting. Member comments in the Q&A session were generally supportive of the move. Stofferahn stated that he plans to provide an opportunity for more member feedback by placing a survey on the GGC Website and through an emailed questionnaire.
The 199A Federal Tax Provision (An Update)
/in NewsUPDATE: An agreement was reached and included in the Omnibus spending bill approved in late March. While the ‘fix’ has re-leveled the playing field, it too is complicated. Therefore, we’ll leave the explanations up to other sources and your tax accountant.
Related Article: How the Section 199A ‘Fix’ Will Work – April 6, 2018 DTN Progressive Farmer
PREVIOUS ARTICLE from Feb 4, 2018: Since the passage of federal tax legislation, a great deal of consternation has ensued about the 199A provision for cooperatives authored by Senators Hoeven and Thune. In oversimplified terms, producers who sell to a cooperative may deduct 20% of gross receipts from their business income compared to a 20% deduction against net income for sales to private firms.
GGC members are wondering if Method A deliveries qualify under this provision. The answer is NO. Because GGC is formed as a MN 308B cooperative, our tax identify is that of a partnership that does not qualify under this provision.
It is unclear if this tax law, with unintended consequences, can be resolved any time soon. Cooperatives want similar treatment to the older 199 provision AND parity with a 40% corporate tax cut to private entities. Stakeholders are meeting, but as of this time, no agreement has been reached.
If a fix can be agreed to, it must then be attached to legislation that passes both houses of Congress – a somewhat difficult task. Meanwhile, a great deal of market disruption and ‘sham’ coop development may occur.
For more detailed background on the 199A tax provision and its potential consequences review Farm Doc Daily’s Post Titled: A Discussion of the Sec 199A Deduction
Annual Meeting Set for March 29th in West Fargo
/in NewsGolden Growers Annual Meeting – Thursday, March 29
The Golden Growers Annual Meeting is set for Thursday, March 29, 2018 at the DoubleTree Conference Center 825 E Beaton Drive, West Fargo, ND. The Doubletree is located on the north side of Interstate 94 where it intersects with Veterans Boulevard.
The schedule is as follows:
8:00 a.m. Registration and Continental Breakfast
9:00 a.m. Short Courses
10:00 a.m. Business Meeting
11:00 a.m. John Bode, President of the Corn Refiners Association
12:00 p.m. Lunch
1:00 p.m. Members Only Question & Answer Session
CRA President, John Bode to speak at Annual Meeting
/in NewsSince 2013, Mr. Bode has served as the President of the Corn Refiners Association, a national association representing the corn wet milling industry of the United States. He has been involved in every significant change in federal food law since the 1981 Farm Bill.
Bode served in three Presidential appointments at the U.S. Department of Agriculture, including Assistant Secretary of Agriculture for Food and Consumer Services. Before joining the USDA in 1981, he was on the staff of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and served on the staff of then-Governor of Oklahoma David L. Boren.
GGC Board Allocates 2017 Income, Announces Payment to Retire Equity Credit
/in NewsOn February 3, 2018, after review of the 2017 end of year financial and income statements, the Board of Directors allocated income of $8,276,784 to the members of Golden Growers Cooperative. The Board also approved the retirement of a portion of allocated equity credit in an amount of $0.161 per patronized bushel for a total of $2,493,967. This payment represents 30% of 2017 allocated income as required by the bylaws of Golden Growers Cooperative.
Payments are anticipated to be issued to Golden Growers members in mid February.
GGC Approves Distribution of $0.14/bushel
/in NewsOn September 14th, the Golden Growers Board of Directors approved a distribution of $2,168,667 to members of record as of October 1, 2017. This distribution is to be issued no later than October 15th. Total 2017 allocated income was $7,366,209. With this distribution a total of $6,552,471 of 2016 equity credit has been retired.
Your Golden Growers Board has determined that it is necessary to build a reserve during the course of this lease. The Cooperative evaluated revenue and cash flows for the current year through the end of the new lease, including the potential for reduced distributions from ProGold LLC due to payments ProGold must make for infrastructure maintenance and certain capital improvements under the lease. The Cooperative also considered its potential purchase and payment obligations under the Consent Agreement dated April 4, 2017.
The distribution authorized by the Board will result in a remaining equity credit balance for 2016 of $813,738 or $0.0525 per bushel delivered in 2016.
GGC Members to Receive 1st Payments by Direct Deposit
/in NewsOver 230 Golden Growers members will receive their October distribution payment by Direct Deposit through the Automated Clearing House (ACH) system.
The ACH system is a method of bank to bank transfers whereby GGC uploads a payment file to our bank (Bell Banks) through a secure system. Bell Bank then communicates these transactions directly to the bank of a participating GGC member.
GGC notified members of the opportunity to receive payments by direct deposit in June. Direct Deposit results in fewer errors, no lost checks, and less hassle for both GGC and our members.
If you are interested in Direct Deposit of your distribution payments, you can find the ACH Authorization form on the Direct Deposit page under the ‘Member Information’ tab on the Golden Growers website. A form was also inserted with your Annual Delivery Election letter.
Simply complete the form, attach a VOIDed check or deposit slip, and return to the Golden Growers Office.
Please feel free to contact our office if you have questions.
GGC Approves Distribution of $0.14/bushel, Builds Reserve
/in NewsRecently, the ProGold Board of Governors voted to resume monthly distributions to its members. The Golden Growers Board is now able to consider future obligations against revenue as they plan for member distributions.
On June 15th, the Golden Growers Board of Directors approved a distribution of $0.14/bushel or $2,168,667 to members of record as of June 1, 2017. This distribution is to be issued no later than June 30th. Total 2016 allocated income was $7,366,209. Along with the February distribution, a total of $4,383,806 of 2016 equity credit has been retired.
Your Golden Growers Board believes it is important to build a reserve during the course of this lease for several reasons. If Cargill chooses to exercise its option to purchase 50% interest in ProGold from American Crystal Sugar Company, Golden Growers will be obligated to buy American Crystal’s remaining 1% in ProGold. In addition, there are likely to be capital expenditures during the lease that are the obligation of ProGold while lease income declines. When capital exenditures occur, distributions from ProGold will be reduced. By building a reserve, Golden Growers Cooperative will be able to moderate the impact of those capital expenditures and declining lease revenue.
The distribution authorized by the Board will result in a remaining equity credit balance for 2016 of $2,982,403.
With this payment, Golden Growers has issued payments to members totaling $94,043,859. This represents 174% of members’ original equity investment in the ProGold plant.
Revised US/Mexico Sugar Sugar Trade Suspension Agreement Reached – Duties/Retaliation Avoided, for now
/in NewsIn late April, after the confirmation of US Secretary of Agriculture Sonny Purdue, expectations for a deal to revise terms of the 2014 Anti-dumping and Countervailing Duty Suspension Agreements were circulating around Washington, D.C. The following week, the U.S. Department of Commerce issued an ultimatum that the Department would reinstate duties on sugar imports from Mexico unless an agreement is reached by June 5th. In response Mexico’s sugar industry submitted a request to Mexico’s Economy Ministry asking for an investigation into suspected dumping of U.S. HFCS syrup into Mexico. On June 6th, an agreement (in principle) was reached that avoided placement of 80% duties on Mexican sugar and immediate retaliation against HFCS by the Mexican Government. The Mexican sugar industry has not withdrawn their request for a probe of HFCS dumping.
RELATED STORIES:
US, Mexico strike deal on sugar trade – The Hill 6-6-17
Mexico Agrees to Sugar Trade Deal, but U.S. REfiners Remain Unhappy – New York Times 6-6-17
U.S., Mexico clear way for NAFTA with new deal on sugar trade – Politico 6-6-17
Mexico Sugar Lobby Says Still Wants Dumping Probe of U.S. Fructose – Reuters 6-7-17
Cargill signs five year lease with ProGold
/in NewsProGold announced on Monday, April 10th that a new lease agreement has been reached with Cargill, Inc. to be effective as of January 1, 2018. The prior lease will remain in effect until then.
While prior leases were 10 years in length, this lease is a five-year commitment with an optional 6th year.
Base rent for the lease is as follows:
In order to maintain the condition of the plant, ProGold agreed to fund a minimum of $750,000 for infrastructure maintenance each year of the lease.
ProGold may also be required to pay additional sums in order to make certain capital improvements in a manner similar to how the cooling tower replacement occurred in 2015.
The agreement includes an option for Cargill to purchase 50% interest in ProGold from American Crystal Sugar Company (ACSC). If Cargill exercises the option, GGC would purchase ACSC’s remaining 1%, to become a 50% owner of ProGold. GGC and Cargill have agreed to a general framework for a future partnership, with a detailed partnership agreement to be completed prior to Cargill exercising its option.
“The evolution of the corn wet milling industry was an important aspect of our discussions,” stated GGC Chairman Mark Harless. “We believe this lease is a reasonable bargain for the near term. It also holds out a possibility of a long term future for the ProGold plant.”